A-shares precious metals sector drops 5%, spot gold plunges. How should investors respond? | A-shares clues

Ask AI · Behind the plunge in gold, how do interest rate expectations dominate market trends?

1. Precious Metals | A-shares precious metals sector plummets over 5% with spot gold breaking below $4700

On March 18 local time, the Federal Reserve announced that it would maintain the federal funds rate target range at 3.5% to 3.75%. Coupled with the sharp escalation of geopolitical conflicts in the Middle East, global financial markets experienced significant turbulence, and international gold prices fell.

On March 19, in A-shares, the precious metals sector dropped 5.68%, with a slight increase in volume compared to the previous day.

International precious metal prices rapidly declined, with spot gold down 5.67%, reported at $4545.45 per ounce.

On the other hand, domestic multi-brand gold jewelry prices have also fallen for several days. As of March 19, many gold brands in China reported that their gold prices have dropped over 130 yuan from their monthly highs. According to a query by Zhongxin Jingwei, Chow Sang Sang’s gold jewelry price fell back to 1492 yuan per gram, a decrease of 158 yuan compared to the monthly high of 1650 yuan per gram on March 3; Lao Miao gold’s price has fallen for seven consecutive days, currently quoted at 1507 yuan per gram, down 135 yuan from the monthly high; Lao Feng Xiang’s gold jewelry is quoted at 1498 yuan per gram, down 144 yuan from the monthly high.

Guotai Junan Securities pointed out that the core drivers are: the dual pressure of oil and inflation suppressing rate cuts, while gold’s financial attributes dominate trends.

(1) The surge in oil prices raises inflation expectations, significantly cooling global rate cut expectations and even raising concerns about rate hikes.

(2) The upward expectation of interest rates increases holding costs, thereby suppressing gold’s financial attributes and its safe-haven and anti-inflation properties.

(3) Short-term capital behavior amplifies the magnitude of the decline, with profit-taking and liquidity cashing forming a dual pressure.

Regarding the future market, Guotai Junan Securities indicated that in the short term, gold prices will maintain a weak fluctuation pattern, with the upward expectation of interest rates brought about by oil inflation remaining a core suppressive factor.

In the medium term, the trend of gold prices will depend on the results of the battle between inflation and the economy. In the long run, the long-term support logic for gold has not completely disappeared. The fragmentation of global geopolitics caused by the US-Iran conflict, the long-term trend of global central banks buying gold, and the uncertainty of the dollar credit system still provide long-term allocation value for gold. Even if it is temporarily suppressed by interest rates, once global liquidity easing expectations resume, gold is still likely to return to an upward trend, although the pace of the rise will be significantly slowed down by the interplay of inflation and interest rates.

Given the current market pattern dominated by oil inflation suppressing rate cuts and gold’s financial attributes, it is recommended that investors remain cautious, mainly adopting a wait-and-see approach, waiting for clear signals from the market. The specific investment strategy is as follows: for medium to long-term allocation-type investors: do not rush to increase positions, wait for gold prices to fall to key support levels and for the marginal easing of rate suppression before gradually entering at lower levels, focusing on leading enterprises in gold resources with resource reserve advantages and cost control capabilities, as well as gold ETFs and other tool-type products to share in the long-term allocation value of gold.

2. Gas | European natural gas futures prices soar due to damage to Qatar’s LNG facilities

According to Caixin, European natural gas futures prices soared due to damage to Qatar’s LNG facilities. The benchmark natural gas futures rose as much as 35% on Thursday, now pulling back to a 26% increase, reaching a new high since December 2022, with prices having more than doubled since the outbreak of war.

On March 19 local time, Qatar Energy announced that several of its LNG facilities were hit by missile strikes early that morning, causing fires. The fires have now been brought under control, and no casualties were reported. The statement did not mention specific details about the source of the missiles.

Previously, on March 18, Qatar’s Ministry of Defense stated that a missile from Iran had struck the Ras Laffan Industrial City, causing a fire. This industrial city is located in northern Qatar and is the country’s main LNG production base.

3. Clues from March 19

1. International energy market turmoil may persist long-term, green power and computing power collaborative concepts defy the trend

Dongfang New Energy, Guangdong Electric Power A, Shaoneng Co., Guang’an Aizhong, and Huadian Liao Energy hit the daily limit, while Jiawei New Energy reached a 20% daily limit.

According to Xinhua Finance, international energy market turmoil may persist long-term. As the conflict between the US and Israel continues, analysts and traders in the global oil and gas markets have generally recognized the long-term possibility of supply disruptions in the Strait of Hormuz, gradually updating risk pricing; additionally, the market believes that current global measures to respond to long-term supply disruptions are limited, combined with increasingly speculative trading characteristics, further exacerbating volatility in the energy market.

Furthermore, CCTV News reported on March 19 that Qatar’s Ras Laffan gas facility was again hit by missiles. Earlier that day, Iranian sources stated that Iran had attacked oil facilities in “Gulf countries housing Iranian enemies.” It is reported that Ras Laffan Industrial City is home to the world’s largest LNG production facilities.

Open Source Securities stated that by 2026, the impact of green certificate supply shocks will end, and with major energy-consuming sectors such as steel, cement, polysilicon, and newly built data centers facing green power consumption ratio assessments, the vitality of the green certificate market is expected to be further stimulated. New operating models like direct connection to green power and collaborative computing power are likely to create a second growth curve for operators. It is recommended to focus on A/H shares of renewable energy operators with excellent asset quality and stable profitability. Beneficial stocks include Longyuan Power (H), Xintian Green Energy (H), Datang New Energy (H), China Power (H), China General Nuclear Power New Energy (H), Zhejiang New Energy, Jiazhe New Energy, EnerChina Wind Power, Three Gorges Energy, Zhongmin Energy, Jiangsu New Energy, and JinkoSolar.

2. Multiple energy facilities in Qatar were hit and caught fire, oil and gas concepts perform actively

Guo New Energy, Blue Flame Holdings, Tianhao Energy, and Hongtong Gas hit the daily limit.

According to CCTV News, on March 19 local time, Qatar Energy announced that several of its LNG facilities were hit by missile strikes early that morning, causing fires. The fires have now been brought under control, and no casualties were reported. The statement did not mention specific details about the source of the missiles.

Previously, on March 18, Qatar’s Ministry of Defense stated that a missile from Iran had struck the Ras Laffan Industrial City, causing a fire. This industrial city is located in northern Qatar and is the country’s main LNG production base.

Additionally, according to CCTV News, on March 18 local time, the Iraqi Ministry of Electricity stated that gas supplies from Iran to Iraq had been completely cut off, resulting in losses of over 3000 megawatts of power for the Iraqi national grid.

Dongwu Securities stated that geopolitical conflicts have led to rising gas prices, and it is important to pay attention to investment opportunities at the resource end; city gas companies are continuing to adjust terminal prices, and unit profitability is recovering, with costs expected to remain stable in 2026. 1) Geopolitical conflicts have led to rising gas prices, highlighting the importance of energy independence. Key recommendations include Shouhua Gas, which has gas production capabilities; it is also recommended to pay attention to New Natural Gas and Blue Flame Holdings. 2) Pay attention to companies with high-quality long-term contracts, flexible scheduling, and long-term cost advantages. Key recommendations include Xinao Co.; consider the long-term value enhancement of special gases in commercial aerospace, such as Jiufeng Energy and Fuan Energy; recommendations include Shenzhen Gas. 3) City gas prices are continuously advancing. Key recommendations include Xinao Energy, with unmeasured profits in 2024 fully digested, and privatization plans showcasing valuation recovery potential; China Resources Gas, Kunlun Energy, China Gas, Blue Sky Gas, Fuan Energy; recommendations include Shenzhen Gas and Honghua Smart Energy.

3. Battery-grade lithium carbonate falls again, lithium mining concept stocks plummet

Weiling Co. hit the daily limit, while Guocheng Mining, Yongxing Materials fell more than 8%, and Tibet Chengtou, Zijin Mining, Dazhong Mining, and Shengxin Lithium Energy collectively plunged significantly.

According to Mysteel data, today the MMLC battery-grade lithium carbonate (morning session) price fell by 2050 yuan per ton compared to yesterday, with an average price of 152150 yuan per ton. Everbright Futures reported on March 19 that lithium carbonate futures fell 4.32% to 150120 yuan per ton yesterday. In terms of spot prices, the average price of battery-grade lithium carbonate dropped 2500 yuan per ton to 155500 yuan per ton, while industrial-grade lithium carbonate dropped 2000 yuan per ton to 152500 yuan per ton, and battery-grade lithium hydroxide (coarse particles) dropped 2000 yuan per ton to 148000 yuan per ton. In terms of warehouse receipts, yesterday the warehouse receipt inventory decreased by 696 tons to 35769 tons.

Guosheng Securities pointed out that looking ahead, the futures market is still significantly influenced by macro liquidity, and the fundamentals are expected to benefit from high oil prices accelerating the penetration of new energy, with lithium prices expected to fluctuate in the short term. Recommended stocks include Ganfeng Lithium, Tianqi Lithium, Salt Lake Industry, Shengxin Lithium Energy, Yahua Group, Dazhong Mining, Guocheng Mining, Hualian Holdings, etc.